Mr. Speaker, today's motion accuses our government of imperilling the economic and social security of Canadians. The only thing truly at peril is the credibility of the official opposition.
All members of the government share the view of most Canadians that our national tax burden is too high. That is why we have committed clearly and concretely to take significant steps to reduce the broad tax burden shouldered by Canadians as we move from a deficit to a fiscal dividend.
The finance minister also made clear that a balanced budget was not the end of a fiscal turnaround. We must move on to bring down our hobbling public debt as well. These facts, high debt, too heavy taxes, are not signs of a national failure or futile policy. They are the carryover of the economic malaise we inherited five years ago.
It was a wasting sickness in which 25 years of deficit spending played a tragic part. It is a disease that still leaves symptoms when the patient is well into recovery. That recovery is a fact that disturbs and dismays members of the official opposition. Since they can no longer deny the success of our approach to deficit reduction, they must find a new threat to browbeat and bully Canadians. That is the threat of reckless spending.
Let us look at how reckless we have been since coming to office and the direction we have set for the future. Let me emphasize that this is a direction which was endorsed by Canadian voters in the last election.
Last October the finance minister presented the government's fall economic and fiscal update. It demonstrated convincingly that our government's plan to restore Canada's fiscal and economic health was working. We started with an absolute and unequivocal pledge to eliminate the deficit. We did this because we understood that the price a nation pays for years of excessive deficit spending is clear, concrete and corrosive.
Most of all deficit financing means higher taxes. Last year the federal government had to pay over $45 billion in debt charges. That is equal to about 32 cents of every dollar of tax revenue Canadians pay to Ottawa. Looked at another way, that $45 billion is equivalent to 70% of federal income taxes that Canadians pay. It is more than EI premiums and GST combined.
That is why when we first came to office we set about putting our fiscal house in order, something the opposition party clearly did not understand then and does not understand today. We knew it was the essential foundation for lower interest rates and higher economic growth which means jobs. I am sure the NDP will appreciate this point. That is what Canadians want. We knew that without a fiscal turnaround we would never be in a position to pursue broader tax reductions.
As most Canadians know, our deficit control plan centred on cutting government spending has met its targets and in fact exceeded them.
Our deficit progress has delivered real and rewarding results for Canada. We have transformed the vicious circle of higher deficits, higher interest rates and slow economic growth into a virtuous circle where lower deficits have helped produce lower interest rates, leading to higher economic growth and lower unemployment, ultimately leading to even lower deficits.
Even today as we have been buffeted by the impact of the Asian currency crisis, Canadian rates are still below U.S. rates, both for 30 day bills and long term bonds.
Our fiscal turnaround is not a transitory phenomenon. We have confirmed that the federal deficit will be eliminated no later than this coming fiscal year and it will be the first time that the federal government books have been balanced since 1970. This means that we are now looking to the day when Canadians will see a fiscal dividend. To sustain our economic progress, we will make sure that our commitment to fiscal prudence does not change. As the prime minister said, we will never again allow the financial health of our country to get out of control.
What about that fiscal dividend once the federal books are balanced? In fact, what about the Reform motion today that warns of that reckless spending by this government? Again, listen to the real facts.
Our government has committed to a 50:50 allocation of the dividend among, one, expenditures to address economic and social needs and two, tax cuts and debt reduction on the other. Let me touch on some of the issues and concerns that we feel must in fact define this dividend debate.
On the tax issue, our government is absolutely committed to bringing down the tax burden of Canadians. Because the dividend can start off small, it leaves little room to implement a substantial across the board reduction right away. We feel that the most responsible course will be to continue to provide targeted tax relief where it does the most good, as we have done in our recent federal budgets.
Our priority here will be to provide tax relief to low and middle income people and families first. When we can afford it, we will and we must go further and reduce the broader tax burden.
Then there is the challenge of investing in Canada's future. We believe the responsibility of the government today goes beyond debt and tax reduction only. To rule out the need to invest strategically in areas such as health care, education and public pensions is not just bad social policy, it is bad economics. Such programs provide Canadians with the security to participate in our fast changing economy with confidence.
The real question is to find the right balance, a balance that ensures that the quantity of growth we all seek contributes to the quality of life Canadians deserve. For example, growth may be central to a strong economy, but in today's world of accelerating technological change, knowledge and skills are central to growth. They are central to a society that is more fair, where people have the skills that mean good jobs and good incomes.
That is why the federal government has taken measures to make registered education savings plans more attractive and flexible, measures that we just this week debated at second reading of Bill C-28. Just this week we debated and voted on this bill. Of course the members of the official opposition rejected that measure and voted against it.
That is also why the prime minister has announced that we will create a Canada millennium scholarship fund, to reward academic excellence and assist thousands and thousands of low and moderate income Canadians.
I guess this is that reckless spending that the Reform Party says puts Canada at peril. I am convinced that the vast majority of Canadians certainly see it differently. They see it as a wise use of part of the coming dividend.
It is also not good enough to have the right skills if our country does not also offer the opportunities to develop and apply those skills in the laboratory and the workplace.
Again, that is why the government, to help strengthen this synergy, called for and created the Canada Foundation for Innovation. It provides $800 million to help maintain or enhance facilities at our hospitals and universities, facilities to deliver world class research and keep top flight researchers here at home.
I will not put words into the mouths of members opposite, but perhaps this is another example of the reckless spending the opposition wants to attack. However, I do not think I have heard them say openly that this is a measure which should be killed. I will not say they have said that, but I will say that most Canadians see it as a rewarding investment, not a reckless one.
If we are to equip Canadians for success in a new millennium we must first focus on early childhood where the capacity to learn is developed. That is why we are building a new partnership with the provinces on behalf of children and providing $850 million in additional resources under the child tax benefit.
Our goal is clear and concrete, to begin to put an end to the welfare trap where low income parents who return to the workforce see their children's economic conditions actually worsen because they lose services provided under social assistance. Going to work should make people's lives better, not worse. We are addressing that.
Is this, once again, the reckless spending which Reform feels will imperil Canada's economy and society? I do not think so.
There is another measure which was included in the debate on Bill C-28, which is the action of the government to enrich the Canada health and social transfer which goes to the provinces to support health care, post-secondary education and social assistance and services. Because of our faster than expected fiscal progress we are in a position to guarantee that the CHST transfers to the provincial governments will be $12.5 billion for each of the next five years. That is $1.5 billion more over the previous floor and it represents overall $7 billion to the provinces. It is an increase which does not threaten our balanced budget.
Perhaps opposition members will think that is reckless, but millions of Canadians would surely disagree. They want a strong health care system. They value support for education. They believe our country should help the disadvantaged. They know these are valid and vital uses of federal resources, especially when they do not jeopardize our progress to a balanced budget.
I suggested at the start that the only thing in peril, going by today's motion, is the Reform's credibility. I think I have made my point.
I would like to pay specific attention to the prebudget document which the official opposition has put forward.
The Reform Party talks about balancing the budget and applying unused contingency reserves to debt over the next three years. I want to thank the Reform Party. I am very pleased that the Reform Party now endorses the government's budgetary policy.
In October the government committed to balancing the budget no later than 1998-99. The government also made the commitment that if the contingency reserve was not needed it would be applied to the debt. That was in October. Some members opposite were there, some were not. I only hope that those who were there would have communicated that to the rest of their caucus.
They talk about freezing program spending through to 2001. Reform suggests freezing total program spending but allowing the natural increase in the major statutory programs to take place.
Essentially what they are advocating is a cut of $3 billion or 6% of the non-transfer portion of spending over the next three years. Where does it come from?
A number of one-time savings are offered up as advocated by the auditor general but where it will find $3 billion of ongoing savings is yet to be identified. That is what the platform says.
Members keep changing their minds on this. They are all over the map. In the 1997 election they talked about calling for large cuts to EI and equalization. Now they think spending on these programs should be allowed to increase. They have no credibility on the issue of expenditure reduction.
We can go on and on but the one area I need to spend some time on because it is a major plank in the platform that this official opposition has is the wide mix of tax measures.
I would call on this party to go back, redo its analysis, redo the costing of this measure because when the analysis is complete, when the tax measures that are put forward by this party are looked at, when they are mature they would cost around $30 billion in foregone federal revenues and would grow by $4 billion each and every year.
They underestimate the total cost of their package by over $10 billion. As a responsible government, we do not have the luxury of basing our policies on sloppy and incomplete analysis.
We have to get our numbers right and we must look at the consequences of any measures that we undertake, obviously not a criteria of that party. In that regard I think we would have to ask ourselves one very basic question with respect to the Reform Party package. Where is the $30 billion plus for tax cuts to come from?
Reformers have not answered that in their platform. They have not answered that in their prebudget document. I suppose we will have to guess what they might propose to do to make up the foregone revenue, perhaps reduce transfers for health and education, reduce benefits for families with children or the elderly or perhaps the suggestion that we walk away from all the sacrifice and hard work of Canadians.
Canadians have partnered and ensured that we were able to balance this budget. Should we just add it to the deficit and the debt? I am not sure at all.
I think when we look at the spending plan that this government has proposed and how it is balanced with the real commitment to action on taxes and debt reduction, the reckless risk taking and a government out of control is not seen.
What is seen instead is a realistic strategy that invests in Canada's renewal, a strategy developed in consultation with Canadians by a government committed to helping them regain control of their lives and their children's future.
The reason this motion deserves to be dismissed is so that we can get on with the job of building that future in a way that is responsible and responsive to Canadians.